October 19, 2007

Other end of the deal

"So imagine you wanted to make a business deal so badly that you handed the other guy a blank cheque, and then after you’d given up so much, the other guy said ‘no thanks.’” Thus began American National Public Radio’s news report on the faltering US-India nuclear agreement on Tuesday morning. The peculiar narrative — uniquely American in its colloquialism — was meant to express incomprehension at India’s apparent rejection of a beneficial agreement.

The UPA government’s unexpected decision not to pursue talks with the IAEA has produced a host of varying reactions in the US in addition to bewilderment: everything from despair to ennui. “It’s over,” an anonymous “western diplomat” told the London Times. US Congressman Gary Ackerman was less melodramatic, urging that the deal not be counted out. The US government has publicly adopted a cautious wait-and-see tone. State Department spokesman Sean McCormack said over a week ago that the US government was willing to let New Delhi take its own time over the deal. His colleague Tom Casey continued in that vein this week. “We don’t want to interfere in this internal matter for the Indian government,” Casey said on Tuesday. “I will say that we would hope that... India would be able to move forward with this agreement and that we would be able to complete it in 2008, which was in general keeping with the original timeframe we had outlined for it.”

For the business communities — both Indian and American — the delay in consummating the nuclear agreement has naturally come as a setback. At the same time, business leaders have also echoed Prime Minister Manmohan Singh’s statements that there is life beyond the nuclear agreement. It is clear that other aspects of the economic relationship will not be immediately impacted.

Despite the handwringing among many pro-India groups in Washington, there is certainly still room for optimism. The bulk of the heavy lifting that needed to be done at the American end has been completed. India will not go back to the pre-July 18, 2005 era, when it was still facing hostile US laws, no bilateral agreement and little likelihood that the global nuclear order would be amended for its own benefit. US law does not have to be altered all over again. The long and occasionally convoluted process of passing the requisite enabling legislation through a seemingly reluctant Congress is over and done with. The 123 agreement has also been concluded. All that remains for Washington to do is to urge all 45 members of the Nuclear Suppliers Group to enable commerce with India, and ensure final approval by the US Congress.

The State Department has expressed optimism on the first step. “We of course have had continued conversations with individual members of the Nuclear Suppliers Group,” Casey said on Monday. “I think we’ve had a number of good conversations with some of the individual nations involved there.”

The second step should also not pose a major headache. The Democrats are certainly more closely affiliated with the non-proliferation agenda than the Republicans, but they will not likely forego a potentially lucrative commercial partnership with India. Nor will they want to be labeled the anti-Indian party. Despite a toughly worded, but non-binding, bipartisan House resolution earlier this month against the deal, the passage of the Hyde Act last year and the resolution’s non-binding nature indicate an unwillingness by legislators of both parties to seriously oppose the deal.

On Wednesday, two former senior officials of the Clinton administration spoke publicly of their vision of the past, present and future of US-India relations. Karl Inderfurth, the former assistant secretary of state for South Asia, and Bruce Riedel, formerly senior director for the Middle East and South Asia in the national security council, provided more reason for optimism regarding the nuclear agreement, stating that the Democrats would keep the deal alive and repeatedly extolling the agreement’s virtues. They were both part of the same foreign policy team that less than a decade ago insisted India meet a set of “benchmarks” after its 1998 tests, including its signature on the CTBT, a fissile material cutoff, a restraint on its strategic missile development and a solution to the Kashmir dispute.

Inderfurth and Riedel listed the wide range of areas for potentially greater US-India cooperation, including space, trade and security. They also said that the deal was “not critical to the relationship.” Yet in virtually all the areas they mentioned, cooperation would sooner or later be limited by the continuing technology embargo on India. Unless, of course, the nuclear agreement was seen through to its conclusion.